The opposition Labour Party and the Council of Trade Unions say the figures represent a significant improvement in the Crown's books and believe the Government should loosen its purse strings and allow New Zealanders to benefit.

But Mr English says one-off factors mean the public finances could worsen later this year and is setting the scene for an austere budget in May, saying he will stick with a $1.1 billion limit for new spending.

Mr English says this needs to be maintained if the Government's accounts are to return to surpluses any time soon.